EU investigating LOT Airlines loan

The European Commission is looking into a 200 million pound ($321.42 million) loan for state-owned LOT Polish Airlines granted in June by the Polish government to see if the deal runs afoul of EU state aid rules.
If the aid is deemed illegal, according to reports, LOT will have to file for bankruptcy upon the return of the money.
The loan occurred just a month after the EU granted LOT a 100 million pound rescue loan.
The most recent loan has been reserved for restructuring costs to help the failing airline turn its business around. The current restructuring plan calls for a rejuvenated LOT to emerge in 2015. In addition to the regulatory questions regarding the loan, the commission doubts that the restructuring plan is realistic.
“The commission will examine in particular whether the planned aid will enable LOT to become viable without continued public funding and whether the company offers adequate compensation to alleviate the distortion of competition caused by the state support,” according to the organization. “The commission will also verify if LOT sufficiently contributes to the cost of restructuring.”
According to EU rules, troubled companies can only be given aid once in a decade to keep failing firms from being propped up by the government, and the commission is concerned about LOT’s eligibility for the most recent loan.
LOT currently operates a 40-plane fleet, but will cut that number nearly in half while reducing its staff numbers. In June, it began Dreamliner 787 service from Warsaw to Chicago.